Kerala floods may slacken the pace of tyre industry

According to a recent report released by the leading credit rating and research agency ICRA, the devastating flood which Kerala has suffered in the recent months could impede the pace of growth of the domestic tyre industry. Kerala produces over 80 percent of the Natural Rubber (NR), a critical component in tyre manufacturing and with a large part of its crop destroyed due to floods, the natural rubber supply from the state will significantly drop.

K Srikumar, Vice President, Corporate Sector ratings, ICRA says, “Inundation and landslides in few districts, apart from the possible threat of diseases on immature plants will dampen the production over the next few months, the critical tapping season. We expect the NR output to decline by 1.2-1.4 lacs MT (or) 18-20% fall during FY2019. With NR being a critical raw material, the sharp fall in output will have consequent impact on the Indian tyre industry. NR accounts for 32% and 35% of total inputs, in volume and value terms respectively, with other key inputs including crude derivatives like synthetic rubber (SR), carbon black, fabric, rubber chemicals etc. Tyre makers also use NR and SR inter-changeably to an extent, depending on the movement in prices and end-use of the product.”

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